Egypt Offers Incentive Packages for Burgeoning Offshoring Industry

March 25, 2010

CAIRO – One of the emerging destinations in outsourcing is Egypt and its burgeoning offshoring sector is expected to generate $2 billion in revenues toward 2013. That figure is projected to climb to $10 billion in just a decade. The increase in outsourcing is assisted by planned incentives for foreign firms, according to an Egyptian government official.

Egypt’s outsourcing sector will fetch a whopping $1.1 billion in 2010. Tarek Kamel, Communications Minister of Egypt told the employees at a 1000 set call center facility, “We are working, in ITIDA (Information Technology Industry Development Agency) and the ministry, on an incentive package. We are expanding in technology parks for the offshoring industry,” reports Reuters.

Eight hundred of the total 1000 seats are already filled and they offer technical and sales support to Stream Global Services clients, which includes satellite radio station Syrius-XM. Scott Murray, CEO and Chairman of Stream said his company will expand further in Egypt and Brazil and that it would begin operations in China with 2000 staff.

“We are starting to look at new sites tomorrow,” Murray told Reuters. Adding, “This center here is pretty much sold out, so we will need another center sometime this summer and probably another one by late in the year or early in 2011.”

Stream has 30,000 staff in 22 nations and is based in Boston. It began operations in Egypt in2009 with 50 workers as a temporary establishment. However, it expects as many as 5,000 staff to work in Cairo and other cities in Egypt within the next two to three years.

Although Egypt has made an entry into the lucrative offshoring market, it still pales in comparison to what India and the Philippines have to offer to firms that require outsourcing. The huge talent pool of skilled laborers and cost efficiency of India are unparalleled anywhere in the world and the subcontinent is expected to lead the outsourcing industry for at least the next twenty years.

Outsourcing is a rapidly growing sector for Egypt since it has a pool of graduates who are conversant in German, Spanish, French, Italian and Arabic and English. The plethora of language expertise in Egypt is certainly an advantage. Incentives for companies go up drastically when 3000 Egyptian employees are hired. Outsourcing firms now provide back office financial and accounting services in the country.

Amin Khaireldin, an ITIDA board member was quoted as saying by Reuters, We do the incentives to share risk with those who are coming,” adding that “As we speak now we are encouraging people to come for financial and accounting because we graduate every year 60,000 accountants from our universities.”

He added that ITIDA subsidies provide for 90 percent of all vocational training. The agency also helps pay for transportation and rent.

Satellite radio station Syrius-XM is the largest client for Stream. Syrius has opted to select Egypt as its outsourcing destination in order to diversify from a more dominant presence in the Philippines and other popular locations for offshoring.

Joe McGuinnis, Syrius-XM’s senior director of call center operations said, “From a performance standpoint it is very comparable” as costs are comparable. He added, “We chose Cairo … as an alternative to the Philippines, the same offshore value but in a different location,” reports Reuters.